OCBC Bank: The Federal Reserve is expected to further cut interest rates by 50 basis points this year and 125 basis points next year

Odaily News Singapore's OCBC Bank pointed out that although inflation has not been completely ruled out, a 50 basis point rate cut is not the norm. In our view, further cuts in the US federal funds rate from now on do not require a recession. Our base case remains that the federal funds rate will be cut by 25 basis points at the November and December FOMC meetings, for a total of 125 basis points in 2025. We are biased downward on 2Y US Treasury yields. The next 2Y US Treasury yield level to watch is 3.83%, followed by 3.70%. In terms of 10Y US Treasuries, we have been arguing in the past few weeks that it will be difficult for the real yield of 10Y US Treasuries to break through the 1.5-1.7% range without a series of weak data; now that the real yield of 10Y US Treasuries has broken through this range to 1.74%, it may take a series of weak data to push it back to the above range. (Jinshi)